Amazon HQ2, one year later: How the search for a 2nd home changed the company, and the country
A rendering of the first phase of Amazon’s HQ2 campus in Northern Virginia. (ZGF Architects)
One year ago today, Amazon named New York City and Northern Virginia as the winners of its search for a second headquarters, concluding its 14-month quest by pledging to build a 25,000-person campus in each of the two regions.
But it didn’t turn out as planned — almost everything else about the extraordinary corporate expansion project known as HQ2.
Amazon’s HQ2 search, announced two years ago, drew more than 230 proposals from regions across North America, with the lure of thousands of jobs, plus controversial tax incentives and other sweeteners. In the year since announcing its decision, the company has been taking advantage of those insights and connections with economic development officials to fuel a massive expansion.
In many ways, the entire country is becoming HQ2.
Amazon is expanding significantly not just in Northern Virginia but also in many of the cities that ostensibly didn’t win the competition. The company has even been growing in New York, despite reversing its decision to put an HQ2 campus there in the face of opposition earlier this year.
At the same time, HQ2 created a national spectacle that contributed to a change in perception of the company, for better and worse. In the months following Amazon’s decision, the company has faced increased scrutiny from elected officials on issues ranging from antitrust to lobbying.
One year after Amazon’s HQ2 decision, here’s where things stand.
A community poised for transformation
In contrast to Amazon’s conflicts with officials in New York, Northern Virginia welcomed the tech giant with open arms. In March, Arlington County approved $23 million in tax incentives — part of a larger $573 million incentive package promised in exchange for HQ2.
Amazon said earlier this year it was ahead of schedule in Virginia, where it plans to hire 25,000 people over the next decade and more for HQ2. Today, Amazon has 200 HQ2 employees working temporary spaces, with another 200 open positions.
Amazon aims to begin construction on the first phase of the HQ2 campus next year. Amazon’s development partner, JBG Smith Properties, presented plans last month for a pair of 22-story towers totaling roughly 2.1 million square feet. The towers would have room for roughly 12,000 employees, almost half the expected HQ2 headcount.
Amazon public policy VP Brian Huseman announces Northern Virginia HQ2 campus. (GeekWire Photo / Monica Nickelsburg)
The campus will have 67,000 square feet of retail space, and Amazon has said it would be willing to offer free or discounted rent to stores on a temporary basis, as it has done in Seattle in the past. The project, which borders Metropolitan Park in Pentagon City, would also include open spaces fronting the park and a daycare center.
Even though it’s been a year, it’s always Day 1 at Amazon. Looking forward to building the future with our continued partnerships with Arlington and Nashville. pic..com/74VHYCUemm
— Amazon Policy (@amazon_policy) November 13, 2019
The same way Amazon’s growth transformed Seattle’s South Lake Union into a global tech hub, the tech giant’s arrival in Virginia is having a major impact on the region. Last month JBG announced plans to redevelop 2.
6 million square feet of apartments and office space near the towers in the area re-branded as “National Landing.” Overall, JBG has plans to build upwards of 4,000 to 5,000 units to go along with 2.
2 million square feet of additional office space.
Amazon’s impending arrival jump-started the local real estate market in Virginia, making Alexandria and Arlington the most competitive housing markets in the nation, according to an August report from Redfin. Inventory is plummeting and prices are rising rapidly, as much as $110,000 over the last year, according to another study from Realtor.com.
“The Amazon HQ2 effect has become a permanent factor in the Arlington and Alexandria housing markets,” Redfin listing agent Marcia Burgos-Stone said.
“Some sellers are still opting to hold on to their homes and wait until it becomes a more concrete reality in the hopes that they’ll get more money.
This has led to a shortage of homes for sale, which puts pressure on buyers who are concerned that they’ll be left behind if they can’t find a home before things get too heated up.”
Amazon in The Big Apple
Amazon may have forgone the public spectacle of a New York HQ2, but the company has aggressively grown its footprint in the city over the past year.
Amazon already had 2,000 employees in New York in November 2018, when the company revealed the winners of its HQ2 contest. That number has grown to 5,000 in the past year, according to NY1.
The company is “scouring New York City for new office space,” The Wall Street Journal reported in July. Amazon has reportedly had talks with WeWork to lease part or all of a 12-story office building with room for thousands of employees in Midtown Manhattan. It’s one of several possible offices Amazon is scouting in the city.
Amazon’s ongoing expansion in New York gives weight to the case made by city officials who fought the HQ2 plan. They claimed that the $3 billion dollar incentive package on the table was a waste of taxpayer dollars and an unnecessary giveaway to a company that already wanted to grow in New York.
New York State Sen. Michael Gianaris hosted a rally protesting Amazon’s New York HQ2. (GeekWire Photo / Monica Nickelsburg)
Local officials and national names, Rep. Alexandria Ocasio-Cortez, were vocal critics of the process by which New York courted Amazon. They held demonstrations and heated hearings with Amazon executives, criticizing the incentives and lack of transparency in the bidding process.
Amazon called the deal off in February, blaming “a number of state and local politicians” who vowed to fight the deal.
Despite that highly public breakup, New York still looks a bit HQ3.
Of the whopping 31,630 open jobs on Amazon’s career website, 10,133 of them are for Seattle positions. The second-largest region for job growth is Virginia, with about 1,300 listings. After that? Greater New York with about 890 openings.
“More than just a single headquarters”
Amazon continues to grow at a rapid clip across the country, hiring close to 100,000 people in the last quarter alone.
Seattle is no longer the only major outlet for the company’s expansion, though it remains Amazon’s biggest location with more than 50,000 employees. While Virginia won the HQ2 contest, Amazon has handed out consolation prizes to other finalist cities and growing markets across the U.S.
Today, Amazon has 18 tech hubs across North America that employ more than 20,000 people in total. In the last 21 months, Amazon has doubled down on 12 of those outposts, many of them HQ2 finalists.
HQ2 spectators have long maintained the contest wasn’t really about picking one location for Amazon’s second headquarters. Rather, it was an ingenious strategy to get cities to hand over reams of data that could inform Amazon’s growth throughout North America.
Early on, prominent urbanists Richard Florida called the HQ2 search a “large-scale, crowdsourced corporate locational strategy.
” When Amazon announced the winners, Florida told GeekWire: “It wouldn’t surprise me to hear, in coming months, ‘We’re going to put a Latin American headquarters in Miami.
We’re going to put a major artificial intelligence and self-driving vehicle facility in Pittsburgh … I think this was always about sourcing, siting much more than just a single headquarters.”
Amazon’s massive investment in its tech hubs over the last year bears that theory out. Here is a rundown of some of Amazon’s major moves:
- In Boston, an early HQ2 favorite, Amazon committed to build a $40 million facility that cements the region as the tech giant’s epicenter for robotics innovation. The new 350,000 square-foot facility in the suburb of Westborough, Mass., about 35 miles west of Boston, will have room for 200 people and will feature corporate offices, research and development labs, and manufacturing space. This is the second time Amazon has expanded in Boston in the last 18 months.
- Amazon pledged to double the headcount of its tech hub in Chicago in September, adding 70,000 square feet of office space with room for an additional 400 employees there. The Windy City is also one of six places where Amazon held a “Career Day” in September to help fill tens of thousands of openings across the country.
- Portland was not an HQ2 finalist, but Amazon is growing rapidly there. The company said in August it planned to move into a new 84,000-square-foot downtown office and expand the team by 400 people. The Portland tech hub focuses on the Amazon Web Services cloud division, and it is also home to AWS Elemental, which came a video processing startup Amazon acquired in 2015.
- Amazon opened its newest tech hub in Houston earlier this year. The 25,000-square-foot office has room for 150 AWS employees.
- Amazon plans to open a new 98,000-square-foot office in Denver that will more than double its headcount there. The Denver tech hub will accommodate 400 new workers on top of the 350 employees Amazon already has in the area, the company said in April.
- In March, Amazon said it would hire 800 people for a new 145,000-square-foot office in Austin. The announcement came just a few months after Apple announced plans to build a 15,000-person campus in the Texas city.
- Amazon expanded its tech hub in Toronto, where Google parent Alphabet is also investing heavily, last year. Amazon opened a new 113,000-square-foot office in Toronto last December, adding capacity for 600 more employees. At the time, the tech giant said it had 800 workers there.
- Coinciding with the HQ2 announcements, Amazon unveiled plans for a $230 million “Center of Excellence for its Operations business” in Nashville. The new center — responsible for customer fulfillment, transportation, supply chain and other functions — will employ 5,000 people in the HQ2 finalist city.
- Last year, Amazon announced plans to more than double the size of its San Diego office. Amazon scooped up an 85,000-square-foot office with room for 500 people. At the time, Amazon said the then 200-person office was instrumental in the launch of Whole Foods grocery pickup and delivery and Alexa grocery shopping features.
- Amazon embarked on a major expansion in Vancouver B.C. last year, announcing plans for a new 416,000 square-foot office in the Canadian city, with capacity for an additional 3,000 people across fields e-commerce, cloud computing, and machine learning. At the time, the company had about 1,000 workers in Vancouver.
- Minneapolis didn’t make the cut for HQ2 finalists, but Amazon announced plans last year to double its workforce there by adding 200 more employees.
- In February 2018, Amazon pledged to add 125 new jobs to its engineering center in Pittsburgh, more than doubling its footprint and escalating the competition for tech talent in a city where big companies Google and Uber are growing quickly alongside homegrown tech startups. The Steel City’s bustling tech scene prompted GeekWire to name Pittsburgh as the winner of its own HQ2 contest.
“The communities’ warm reception and the state and local governments’ strong support have allowed us to make significant progress towards building our presence in Arlington and Nashville,” an Amazon spokesperson said in a statement. “We look forward to our continued partnerships as we work to attract world class talent, grow alongside our neighbors, support local businesses, and create new public spaces for the community to enjoy.”
Seattle strife and Eastside expansion
Bellevue, Wash., is not officially one of Amazon’s tech hubs, but it is the tech giant’s original hometown.
Amazon turned to the city, about 10 miles east of its headquarters, after its relationship with the City of Seattle went south last year during the contentious debate over a tax on big businesses.
It has only been two years since the company opened its first office in downtown Bellevue, but in that short time, its presence there has grown to rival HQ2.
Downtown Bellevue, Wash. (GeekWire Photo / Kurt Schlosser)
The biggest coup for Bellevue came earlier this year when Amazon made the decision to move thousands of employees from the crucial worldwide operations group there by 2023. Amazon has since dropped $195 million on a prominent downtown development site, where it is planning one, or possibly two new towers.
As Amazon doubles down on Bellevue, its relationship with Seattle has grown fraught. Last year the company became embroiled in a heated battle with the Seattle City Council over a controversial piece of legislation known as the “head tax.
” It would have taxed Seattle’s top-grossing businesses on a per-employee basis to fund services and housing for the homeless. Amazon threatened to slow its growth in Seattle if the City Council enacted the tax.
The City Council passed, then repealed, the head tax but several councilmembers pledged to continue fighting for new business taxes.
Sawant declares victory. (Photo via KshamaSawant.Org)
Those councilmembers got a big boost this month when Seattle re-elected frequent Amazon antagonist Kshama Sawant and other far-left candidates to the City Council. Amazon spent $1.
45 million to elect more business-friendly candidates to the council but the effort appears to have backfired.
Amazon’s record political spending had national politicians Senators Bernie Sanders and Elizabeth Warren weighing in on Seattle’s local races.
“Our campaign was a referendum on the Amazon Tax,” Sawant said in a statement. “I look forward to working with this new, progressive Council to pass a tax on Amazon and Seattle’s biggest businesses.”
Despite an increasingly tenuous relationship with Seattle’s government, Amazon’s hometown remains the epicenter of its massive hiring push. But in the months since HQ2 was announced, the company is clearly taking a more diversified approach to growth. As Amazon continues to expand across the country, it is under a magnifying glass that isn’t ly to lift anytime soon.